Crude Oil and oil markets

[dpaterso]

Although I understand that your system tries to get fully loaded before reversing towards the rewards, I can imagine that it is very frustrating carrying positions while the market just wallows around in the same range. I couldn’t do that!

Yip. Frustrating it is. No question about that. It’s the reason why I don’t really mind which way the markets move as long as they move one way or the other. Those days where everything just drifts aimlessly around are mind numbing. Or days like yesterday as noted i.e. where the thing closes at or near its open and just before the close to boot.

Actually, I kind of understand how you are building your positions but how do you exit them? Is it again down to the RSI changing or just a reverse signal? How do you decide when to quit positions if they are not performing?

Exit whether at a profit or a loss when RSI(2) CLOSES above 70 (or below 30). Nothing more to it than that. And doesn’t get much simpler than that either let’s face it.

The building of the positions is also pretty simple (now with that method you looked at with me). Essentially I have to decide before even entering a trade what my total final position must be. Then I just break that number down and enter the trade in increments. So if the total allowable full position is, say, 10 units then I just scale-in 1+2+3+4=10. And alright I bend the rule by entering a trade when RSI has closed ONCE above or below 70 or 30 so this results in an extra first portion if that makes sense i.e. 1+1+2+3+4=11. Does’t make a huge difference to profits or losses or risk. But what happens VERY often particularly on the S&P is that RSI(2) will close below 25 (or above 75) today and then reverse totally the next day. On those trades I take profit on the day regardless of whether RSI(2) has closed above 70 or below 30. If on those days there is a loss on the initial opening then I hold it and carry on with the 1+2+3+4 (because when that happens it’s then a normal trade). And that’s about it.

[dpaterso]

They’re not catching me like they did yesterday!!! LOL!!!

Have you SEEN Brent???

It has just traded to S3 so I’ve gone long based on my theory mentioned earlier (position size based on what I would have been scaling-in with tonight at the close anyway).

Fact of the matter for me is: I’m looking to go long anyway. And chances are that I may have gotten in now at an even better price than had I waited for the close. If I’m wrong and it goes down a bit more then I’ll just add another position of the same size. Thanks to that ATR position sizing I’ve got a reasonable little amount of room for error (aka greed!!! LOL!!!).

Exciting stuff. Most excitement (most pleasurable excitement anyway) I’ve had in years with this!!! LOL!!! Oh the small things in life.

On the other hand: have to hand it to myself. Ten years ago I would have bet the farm on this. Now just stuck to my constraints. And while I may end up kicking myself on this trade if it closes at something spectacular eventually: the next one will be different for sure.

[dpaterso]

Hmmmnnn…

Just saw on the news now (on TV): now the Saudis are throwing stones at Iran. Something is going to kick off here very shortly. Methinks it’s time to begin filtering through defense contractor stocks and arms manufacturers. Dirty work but somebody has to do it!!! LOL!!!

Well it’s not gone anywhere since my jumping in. Although I’m not sure why i.e. they’re obviously not listening to the same news I am.

[dpaterso]

Well. It’s been jolly. Thanks for the banter.

In some nice oil positions now I must say. One more down day and I’m happy for sure.

Must admit I was dumb though i.e. don’t know why I didn’t go long WTI at the same time. Oh well.

Look forward to your early morning insight and analysis on the oil market.

[anon46773462]

@anon46773462

I closed it for the magnificent and triumphant profit of one single green pip!

After yesterday’s oil “trade of the month” gain of one whole green pip, the fun only continued - this time in SP500.

I was yesterday evening looking for a drop to the Daily 200SMA. I sold the market, saw it drop to +75 pips, moved my stop to B/E+ and promptly got stopped out for +6 pips!

But it still looked weak so I sold again, saw it again drop to +65pips, again moved my stop to B/E+ and again promptly got stopped out for +3pips

So far, a colossal +9pips!

So, on the basis of my most intellectually and cunningly devised trading strategy: “What should go down and doesn’t must go up”, I then bought it. Saw it rise 25 pips and…stopped dead in its tracks. So with the deep heaviness of an index finger bored into state of traumatised numbness, I closed that position too for a lordly sum of +20 pips. So with the heady cumulative pot of +29 pips (making 30 pips with the oil trade, remember!) - I gave up on the SMA200 and went to bed…

But as usual, when all good girls and boys are asleep the tweeterbugs come out to play and we slap a few tariffs on Mexico and withdraw some trade advantages from India and this morning, here we are on the south side of that SMA 200! Cold comfort to be right …and not on the bus

Sovereign debt yield curves are turning negative, historically a sure sign of impending recession - but who cares, we just put our heads in the sand and ignore it as long as the tariff taxes keep rolling in.

Afterall, the same approach works with the climate concerns, ignore it and it will just , poof, go away:

" a report emerged earlier this week that the Trump Administration was considering excluding the worst-case emissions scenario from a report on the impact of climate change on the United States and its economy."

[GilasTrading]

I had 2.4 lots short USDJPY. Set TP1 and TP2 for different tranches. Wasn’t moving much. So closed everything over time for a total of about 200$. Went to bed semi satisfied.

Woke up to Trump’s tweet. It’s hit my TP1 at 109.20 and TP2 at 109, even went past it. I missed out on another over $1K. Sigh. But hey, let’s be happy we made a bit of money, and definitely happier we weren’t caught on the wrong side.

On the positive side I left 10 units of FTSE shorts, woke up to a nice $400. So I shouldn’t really be complaining.

[anon46773462]

@GilasTrading

and definitely happier we weren’t caught on the wrong side.

Precisely (and congrats on surviving on the plus side)!

I used to approach trading more as a game of tactics and strategy, like playing chess. But nowadays it is a bit more like crossing a raging river by jumping across the backs of crocodiles before they have time to snap your feet off! - and scoring a peanut every time you succeed!

(Photo:David Moynahan Photography)

Seems like in order to follow oil one has to only comment on indices!

But it is Friday, the weekend and the last trading day of the month. Will we see a quiet one as markets just focus on dressing their accounts - or will we see a follow-through on the equities below this Daily SMA200 with a sell-off and movement into safer instruments like sovereign debt?

It is strange how whenever the issue of trade wars and tariffs is addressed, people talk mainly about who it is going to affect most and by how much, the Chinese or the Mexicans or the Indians or the US itself.

But if one looks at the topic from a bird’s eye perspective, then we see tariffs as just another form of taxation being applied in erratic, but large, chunks here, there and everywhere. The overall impact is that an awful lot of businesses and individuals are suddenly forking out a whole chunk of extra money on, well, taxes and more taxes.

If this was an internal national act whereby a leader just suddenly overnight, with no govt discussion, no warning, no continuity, slapped on, say, 10% tax on electricity, 25% on petrol, 15% on electronics, 5% on soy beans, then I would imagine that the country would soon be on the streets and threatened with drifting into a Venezuela-type situation. But because these tariffs are international the taxation angle seems to be overlooked in the anticipation of national gain at the expense of others.

But if the globe is being taxed heavily and progressively then the globe is going to slow down. And when the globe starts to pull off the road then the investments climb off onto something else.

I just wonder where we will close today…

[anon46773462]

Well here we are - will I see yet another “dejà-vu” here?

Shorted SP500, it just reached 90+pips so just moved stop to B/E+ a few pips. Now I will just let it ride. Will it end up as a good last day for the month or just a B/E. Either way is ok!

But that’s that and now for another coffee…

[dpaterso]

Good morning. Seems I cannot leave you to look after the markets for just a couple of hours while I get some sleep!!! LOL!!!

Needless to say I’m taking a bit of beating this morning at the moment. All I can say is thank goodness for the ESMA and those position size calculations (which I’ve been meaning to try an implement for a long time but never got around to it until now i.e. must be a sign). Need to update my thread because I’m sure there’s one or two watching to see how this system is going to perform under such adverse market conditions (and probably at least one or two waiting in the sideline actually hoping that I wipe out if for no other reason than to prove a point). Unfortunately for me: I may have to cap my losses at an amount equal to my profits made this last month thus far. Not there yet (about half way at this point) but may have to do it. Under any other circumstances I’d just keep going as is because this trading system does have an uncanny ability to come back to profit even under conditions such as these. But I’m just not in a position right now to be able to take losses of capital. Particularly after yesterday’s news. Anyway. It is what it is.

Oddly enough I couldn’t sleep nice last night and actually just happened to have my account open on my iPad in bed in the wee hours this morning and I saw everything tank suddenly and wondered what on earth was going on. Quickly opened my Bloomberg app. (which I ordinarily avoid like the plague nowadays) and there it was i.e. Trump and Mexico and Twitter!!! Now I no more question anything about markets at all. They do what they do. But there’s probably only one thing that after ALL of these years I STILL do not understand. That was a mere Tweet from the Village Idiot THREATENING to impose tariffs TO BE IMPOSED on 5th JUNE. Bearing in mind that Trump’s Twitter Machine (as David Letterman use to call it) is really nothing other than a news feed: why do markets react immediately to this type of thing. Does my question make sense??? In other words: I COULD understand if the markets tanked ON the day or maybe even on the PREVIOUS day when the tariffs (in this case) would come into effect. But they’ve tanked IMMEDIATELY and on a mere threat. This behavior I’ve seen year after year after year and it’s something I’ve never been able to grasp. It’s different from hard (disappointing in this case) data i.e. that’s fact at that given at a certain period in time. But markets react on a whim. And as I say: never quite understood it. ONLY thing that makes any POSSIBLE sense to me is that (using this case as an example) they tank NOW and if or when the day comes then price is already built in and they don’t react and business carries on as usual. NO idea about this.

[anon46773462]

@dpaterso

But they’ve tanked IMMEDIATELY and on a mere threat.

Is this not the usual basis for “sell the rumour, buy the fact”?

But I think in this situation we are seeing something that is far more macabre and disturbing.

Firstly, Mr Trump doesn’t just say things - he does them, too. In other words, these are not idle threats.

But what is, in my opinion, far more sinister here is that Mr Trump idolises the likes of Mr Putin, Mr Jinping, and even Kim Jong-un, because they are dictators in their own countries. Mr Trump has shown many signs lately that he is treating Congress as a puppet government, only there to rubber stamp his decisions.

More and more Presidential powers are coming to light that are really only intended for extreme situations and are now being applied to “everyday” decisions, such as arms sales to SA.

If Mr Trump is treating the world as one big business environment, which he is intent on turning totally upside down in favour of the US, but only using tools of penalties, sanctions and taxes to brutalise counterparties into submission, then I find it hard to belief that the global trade environment will not at some point implode on itself - and then I doubt that one man’s twitter is going to hold up the dams from busting under the pressure.

[dpaterso]

Nice opinion and insights.

Yes I must say this is something I thought about in the wee hours this morning (and truth be told not the first time this has crossed my mind of late). I actually had no idea that a President could autonomously make decisions such as these. At least not in the US. But it seems this guy has free reign to do as he pleases when he pleases. Not to mention blatant disregard for their legal system. The list goes on. I’m really really surprised.

The above being said: I have a tendency to base things down i.e. I don’t have the ability to have the insights that you do. I say this because it would not surprise me in the least bit if this is just not pure and simple market manipulation and with an economic motive of a personal nature. May sound like a conspiracy theory I know. But I sure do hope somebody is checking details of trades being placed at or around the times of these Tweets. I can tell you right now (and I joked about this earlier): if I knew minutes before what his Lordship was about to Tweet I’d bet the farm with total confidence knowing I’m going to be on the right side of the trade every single time. Why Tweet this stuff??? Before this maniac came to power a President may have a news conference and just happen to mention that “hey: if this happens then I’m going to do that” type of thing. And in my experience: only when it’s a hard fact would markets react. That has now changed obviously. But why the Tweets??? Because I can tell you now that it would not surprise me in the least if NEXT week we get another Tweet that’s a form of a retraction or toning down of the rhetoric and, of course, we’ll see a rally in stocks. Now obviously I’m biased given that a rally sure would suit my purposes. But this wouldn’t be the first time I’ve seen this happen since your’s truly has been in power.

Frighteningly though: this could simply be a matter of someone that has a personality disorder and such disorder is being fed in spades because of the power that comes with his position. From where I sit (and in all fairness I can only based my opinions on whatever news bytes we are privy to this side): there’s a lot of things going on that make absolutely no sense to me whatsoever. This Iran thing for one thing. Not that I’m a big fan. But the edge that this man’s decisions are putting the world on just do not make sense. And it’s funny: there are so many people that are drawing parallels at the moment between this so-called intelligence that he is being presented with and the same so-called intelligence that George W. Bush was presented with. Anyway. Who knows.

[dpaterso]

For what it’s worth:

Futures on the Dow, S&P, and NASDAQ have all just traded to S3 and stalled. Obviously I’m not acting on any of this (sure don’t need to actively MAKE problems here) but will be keen to see if these levels hold. On a lot of the other stuff though: prices has barreled through S3 like it didn’t exist. I guess we shall see as the day goes on shall we not.

Sadly I’ve seen this before though. Somehow or another these markets have an uncanny ability to sniff out pain levels. How they do that I do not know. But I’ve been there on a few occasions and I’ve always marveled at just how precises this “indicator” is. One thing I’ve not mentioned about my Gold trade that went so bad last year: I eventually bailed on the position (this in spite of actually having enough margin to hold for more of a thrashing) on THE EXACT DAY that it turned and began to rally to $1 300 with only one or two pauses in between. And that was not the first time this has happened.

[anon46773462]

Well I decided to close out my SP500 trade here. The market is not falling as fast as one could have feared and we are certainly not seeing automated selling triggering here. The selling may well continue anew in NY but, on the other hand, we might see a more subdued action and maybe even a climb back up to that SMA 200. It is the end of the week and the month.

I do really like to finish the month on a good note and I am very happy with this 100+last trade - no matter what now transpires as NY gets underway. I actually sincerely hope that we do not see a sell off as that is bad for everyone.

I have noticed that I am becoming far more interested in SP500 trading than oil and I will have to think over the weekend how I want to continue this thread.

But that is it for this week/month. As I look at my statistics I can see how my trading has changed along with the markets. My usual approx 30 trades/month has risen to over 50 and the win rate has dropped from the usual approx 70% to 65%. In addition, the number of trades exiting by TP has dropped and the number closed manually has increased substantially, which means two things 1) the anticipated price movements have been shorter than historically and 2) win pips/loss pips ratio has also been squeezed.

So a “plus” month but somewhat mediocre on performance.

Happy weekend to one and all

[dpaterso]

Tell you one thing for nothing:

I’d be lying if I told you that I wasn’t pleased that I got out of my Oil trades this morning!!! LOL!!!

[dpaterso]

You watching or listening to the news???

I’m sorry that I’m not short these markets (although in my defense I never got signals to be so I can live with that). But I sure am glad I’m not long. Chinese tariffs late Friday as well as some unprecedented Chinese news conference held this morning. Loads of saber rattling (and I fear it’s more than that).

As I said on a another thread: I hope this lot have a plan.

[anon46773462]

I can imagine that next week will be filled with Mr Trump headlines as he enjoys his state visit to the UK 3-5 June.

He will certainly take the opportunity to further stir up issues on Brexit, EU, The new Tory leader, Mr Farage, Huawei, new deals with the UK and the, in his words, beautiful word: Tariffs.

I am currently fully engrossed with backtesting my longer term trading strategy for SP500 and i really can’t decide whether to track it here or start a new thread for it or just go to ground and return when (and if) there are some results! This last option is certainly the most sensible, i think!

[dpaterso]

Depends. From what I gather you’re not fond of the limelight so maybe there’s your answer!!! LOL!!!

Gotta say something though:

Due to my being asked some various questions recently relating to old stuff that I’ve not bothered to give a second thought to for these past few years: I’ve looked at some of that old stuff and quite frankly I don’t understand why it didn’t work out (other than possibly my lack of experience and discipline and patience coupled with the wrong mindset at the time). Dunno. Got to watch myself here.

[anon46773462]

I’ve looked at some of that old stuff and quite frankly I don’t understand why it didn’t work out

I have often pondered why everyone is always looking for something new.

At the same time i have always tried to understand why people criticise so much various methods as being useless because they are “lagging”! But that is often the very reason why they are useful and why they were designed that way in the first place!!

Virtually everything we use is based on a comparative study of where price is now compared with where is has been in the past. Whether we look at candle patterns, S/R levels, MA’s, RSI, ATR, or whatever there is always a comparative factor. between present and past. The question really is solely how we read, interpret and use these comparisons.

For me, it has always been MA’s. My basic premise is that markets are always moving - and once they start off in a certain direction, that they will continue in that direction for a certain length of time. MAs tell me when price is starting to move away from where it has previously been . And that is because they are lagging indicators - it is their function and cannot be anything other than lagging in order to fulfil that! The bigger problem is gauging how far any move will continue and optimising the exit strategies!

But that is my own qwerky approach and does explain my shunning publicity!

[anon46773462]

From what I gather you’re not fond of the limelight so maybe there’s your answer!!!

Your right. I should come back when i have something worth saying and a purpose for saying it. Now to concentrate on some longer timeframe research and testing…

In the meantime good luck with all your current matters. I hope everything works out well in the end!

[dpaterso]

Good morning.

With reference to you last post: thanks. Much appreciated. Unless something drastic changes and very soon: I don’t see this ending well to be honest. The again: I suppose “well” is a relative term isn’t it. So many things have collided in the past few months that it feels as though even if I got paid today I’m not that sure that my mindset would be radically different. Anyway. We shall see what’s going to happen soon enough.

With reference to you previous post: not questioning what I’ve been doing these past years. And I’ll admit that the current situation is probably playing a part in my revisiting old favorites. Called desperation I suppose. Great as my system is: it’s not a monthly cash generator let’s face it. Great as a monthly on average system. Don’t really have the luxury of being able to trade for the next twelve months only then to average out at whatever per month. And sitting out of the market on your hands under these circumstances isn’t easy. Somebody is making money on these down moves. Just not me at the moment. So that’s the answer as to why I am looking around. Cannot speak for others. But yeh: in just looking at Wilder’s good ‘ol ADX (which I must admit was an incomplete study from years ago for me) it would have had me in long for the entire rally that started post December and short right now pretty much from the top. Same as Bill Williams’ Fractals (my version thereof anyway). For some reason or the other history is repeating itself here to a degree. I miss things. Now as back then I am looking at hugely profitable trades and asking myself how I missed them and what was I doing at the time so as to have missed them. Prime example was yesterday when somebody pointed out to me that the S&P had formed a double top. Sure enough. But I didn’t even see it. And for sure it is a trade I would have taken with the double top system I use and which thus far has been 100% accurate albeit that there very few trades with it. Dunno if it’s that I’m not concentrating or what. And seem to now remember this from years back. Almost like I was fooling myself into thinking that just because I was sitting in front of screens 24/7 I was actually busy and doing something. Which was not the case. Time after time I was missing out on trades and rallies and could never fathom why or what it was that had distracted me so much that I wasn’t in a perfectly valid trade and highly profitable at that. This is why I say that it’s probably incorrect for me to assume that it’s the stuff I was working on at the time that wasn’t working. But rather me. Dunno if any of that makes sense. Maybe a lesson here in my core system: been conditioned in that I know that every day for that half hour before the close there are things I have to check and look for and act accordingly and which I do and that works obviously. As newbie as it sounds: maybe I need to formulate a checklist of other things to be religiously checking on a daily basis. Food for thought.

Moving on. A bit surprised at the lack of movement this morning. Given all the news conferences and saber rattling over the weekend I would have expected to see far bigger moves down and far bigger gaps. Always unsettling when you have a certain idea of what you think should be and isn’t. Not saying these things are not going to tank further of course. But don’t think I’d like to be caught on the wrong side of a pullback. Sometimes they can be pretty severe. At least on that score I’m alright I think i.e. with my core system no pullbacks no trades no money. I guess we shall see. Interesting days and weeks ahead maybe. Then again and as we have already discussed: frighteningly could amount to one or Tweets and a kiss and a hug and next thing you know we’re making new highs on the S&P.

P.S.

Alright. An hour or so later the expected moves appear to be happening. Sure looked like things could have gone either way about an hour ago.